LONDON MARKET OPEN: Stocks Open Lower On Global Recession Fears

(Alliance News) - Stock prices in London started the day on the back foot, following muted session in Asia overnight and poor German economic data, as investors attempt to guess the next moves in the US-China trade dispute.

The FTSE 100 was down 28.75 points, or 0.4%, at 7,060.83. The FTSE 250 was down 85.00 points, or 0.4%, at 19,250.88 and the AIM All-Share was up 0.16 points at 870.35.

The Cboe UK 100 index was down 0.3% at 11,978.47. The Cboe UK 250 was down 0.3% at 17,179.91 and the Cboe UK Small Companies was 0.1% lower at 10,886.19.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were 0.7% and 0.6% lower, respectively, in opening trade.

German import prices fell more than expected in July, whilst export prices grew in line with June figures.

Data from Destatis showed the import prices index fell 2.1% in July on the year prior, a steeper fall than the 2.0% recorded in June. This decline was faster than the 1.7% economist consensus forecast, according to FXStreet figures. In contrast, export prices grew 0.2% in July on the year prior which was in line with the 0.2% year-on-year growth recorded in June.

"The pound, meanwhile, found support as investors latched on to more positive tones between London and Brussels, as well as manoeuvres in the House of Commons in an attempt to block a no-deal," said Lloyds Bank analyst Hann-Ju Ho.

The pound was quoted at USD1.2282 early on Wednesday, broadly flat compared to USD1.2290 late Tuesday.

The Scottish National party, Liberal Democrats, Plaid Cymru, Greens and The Independent Group for Change joined with Labour to prevent a no-deal Brexit.

The coalition is preparing to start moves on Tuesday next week to pass legislation aimed at stopping UK Prime Minister Boris Johnson from taking the UK out of the EU without an agreement on October 31.

Meanwhile, Johnson has told European Commission President Jean-Claude Juncker that Britain will leave without a deal unless the backstop is "abolished".

During a phone call on Tuesday evening, Johnson told Juncker that nothing short of reopening negotiations and removing the Irish backstop would be good enough for his Government to consider signing an exit agreement.

In Asia on Wednesday, stocks were mixed. The Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite ended 0.3% lower, while the Hang Seng index in Hong Kong was down 0.2% in late dealings.

"Markets remain relatively volatile on the uncertain outlook for global trade," said the Lloyds Bank analyst.

Though US President Donald Trump insisted that talks with Beijing are back on, the White House Tuesday released no new details about upcoming negotiations.

Among stocks holding back London's FTSE 100 index on Wednesday was Anglo American, down 0.8%. Anglo American reported a recovery in diamond sales, though the figure remains well down year-on-year.

For the seventh cycle of 2019, De Beers diamond sales were USD280 million, 12% higher than the sixth cycle but 44% lower year-on-year.

In the first half of 2019, De Beers generated USD2.65 billion in revenue for the London and Johannesburg-listed mining giant, around 18% of the total USD14.78 billion revenue total.

Turning to mid-caps, Greggs climbed to the top of the index, up 3.1%, after USB raised the UK bakery chain to Buy from Neutral.

Diploma started the day 1.2% higher, after saying it expects annual revenue to increase by 13% to GBP548.2 million, thanks to acquisitions and a currency tailwind.

Operating margin is expected to be modestly ahead of last year, the engineer noted, benefiting from tight control of costs and operating leverage from growth in revenue.

James Fisher & Sons was at the bottom of the FTSE 250 index, down 5.6% in early trade. The marine services provider warned that its Marine Support unit had a slower start to the year due to a weak market in South Africa and provisions for contracts and doubtful debt.

The company recorded a decline in pretax profit for the six months to the end of June to GBP20.9 million from GBP21.5 million a year earlier. Revenue meanwhile increased by 10% to GBP260.5 million, thanks to a strong performance from the Offshore Oil and Tankships divisions. At constant currency and excluding acquisitions, revenue grew by 4%.

Elsewhere on the Main Market, Thomas Cook shares fell 13% in early trade after it agreed a "significant" new capital investment with its largest shareholder Fosun Tourism Group, core lending banks, and a majority of 2022 and 2023 senior noteholders.

Thomas Cook's shareholders will be "significantly diluted" by this funding plans, which involve the conversion of debt to equity.

The holiday operator said Fosun will contribute GBP450 million of new money to the company and will buy at least 75% of the equity of its Tour Operator unit, plus 25% of its Airline operations.

Still to come in the economic calendar on Wednesday are Irish retail sales at 1100 BST.